Organizations without leadership succession plans are often surprised when CEO transition arises. Since leadership did not focus on succession planning before the transition, the board is forced to discuss many of the questions highlighted in this blog during the transition. Often these questions come up during the search, leading to a delayed or interrupted search. Further, an organization that is not prepared for succession, often requires more day-to-day support from the board. What happens in the interim period? How can these activities weaken the organization?
Leadership transition will occur whether or not the organization has a succession plan. Leaders get sick, identify new opportunities, and experience other challenges that lead to transition. Once these situations occur, organizations often identify an interim CEO internally or hire an interim CEO from outside of the organization. Either option has its own challenges.
Promoting from within on an interim basis often changes the internal dynamics of the leadership team. As the search continues, the interim CEO becomes the face of the organization and takes on more of a leadership role. Her peer relationships within the organization’s leadership team are altered as she plays more of a supervisory role. She may also feel overlooked by leaders involved in the CEO search. Once the new CEO is hired and the interim returns to her previous position, she may feel detached. Eventually her detachment leads to her own transition, either by choice or due to conflict with new leadership. Losing two senior leaders in a short period leads to a longer transition period and weakens the organization.
On the other hand, as the search persists, the board may choose the interim CEO by default. This non strategic decision can lead the organization away from its mission and vision.
To eliminate these challenges, there is a new industry providing interim CEO’s to nonprofits. Although these professionals have CEO experience, they often do not have current knowledge of the market and the relationships the organization needs even in the short term. Additionally, it takes time for the interim CEO to become familiar with the culture and needs of the organization.
In either case, the interim CEO’s role is to keep the organization on the status quo and postpone making significant decisions. Frequently, putting off significant decisions makes funders and donors nervous. The flow of revenue is stalled, as donors hesitate to make larger long term gifts. The lack of direction also creates uncertainty for staff.
During the interim period, the organization does not have a stable person focused on building relationships and presence in the community. As these duties are put on hold, the organization loses momentum and the absence creates a vacuum. The organization loses opportunities to partner and be fully involved in the community and movement.
Internally there is a void as well. The interim does not have the same relationship with the board as a stable CEO. Without this relationship, the connection between staff and board is weakened. Staff need updates but there is not a strong avenue of communication. The uncertainty creates discomfort and anxiety. The internal vacuum often leads to programs/locations shifting and losing connections and synergy with each other. The organization also loses an additional check on finances and overall budget accountability.
Finally, lengthy searches distract boards from their other duties of governing, fundraising and “friendraising”. Board members are often forced to get more involved in day-to-day activities. As they become involved in day-to-day activities, they often lose track of the distinction between supervision and governance creating a more challenging environment once the new CEO begins.
CEO transitions create opportunities and challenges. Preparation and strategic thinking before the transition provides leaders with the occasion to explore where the organization is, what direction it should be going, and recognize the type of CEO needed. We will explore these activities in upcoming blog posts.